Correlation Between National Bankshares and Southern Missouri
Can any of the company-specific risk be diversified away by investing in both National Bankshares and Southern Missouri at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining National Bankshares and Southern Missouri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bankshares and Southern Missouri Bancorp, you can compare the effects of market volatilities on National Bankshares and Southern Missouri and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in National Bankshares with a short position of Southern Missouri. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bankshares and Southern Missouri.
Diversification Opportunities for National Bankshares and Southern Missouri
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between National and Southern is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding National Bankshares and Southern Missouri Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Missouri Bancorp and National Bankshares is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on National Bankshares are associated (or correlated) with Southern Missouri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Missouri Bancorp has no effect on the direction of National Bankshares i.e., National Bankshares and Southern Missouri go up and down completely randomly.
Pair Corralation between National Bankshares and Southern Missouri
Given the investment horizon of 90 days National Bankshares is expected to generate 3.05 times less return on investment than Southern Missouri. In addition to that, National Bankshares is 1.21 times more volatile than Southern Missouri Bancorp. It trades about 0.02 of its total potential returns per unit of risk. Southern Missouri Bancorp is currently generating about 0.07 per unit of volatility. If you would invest 4,222 in Southern Missouri Bancorp on November 5, 2024 and sell it today you would earn a total of 1,561 from holding Southern Missouri Bancorp or generate 36.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bankshares vs. Southern Missouri Bancorp
Performance |
| Timeline |
| National Bankshares |
| Southern Missouri Bancorp |
National Bankshares and Southern Missouri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bankshares and Southern Missouri
The main advantage of trading using opposite National Bankshares and Southern Missouri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bankshares position performs unexpectedly, Southern Missouri can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Southern Missouri will offset losses from the drop in Southern Missouri's long position.| National Bankshares vs. Finward Bancorp | National Bankshares vs. Community West Bancshares | National Bankshares vs. First Financial Northwest | National Bankshares vs. Oak Valley Bancorp |
| Southern Missouri vs. Commerzbank AG | Southern Missouri vs. Investar Holding Corp | Southern Missouri vs. Colony Bankcorp | Southern Missouri vs. Western New England |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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